The impact of real estate investment on the performance of pension funds in Zimbabwe.

Abstract

The study examined the impact of investing pension fund assets in real estate on the overall performance of a pension fund. The study categorised pension fund assets allocation according to the IPEC categorisation which are Real estate, Government stock, Loans and Mortgages, Shares and Debentures, Other Investments and Other Assets. The study examined all pension funds in Zimbabwe using consolidated published quarterly reports from IPEC for all pension fund assets allocation from 2010-2017. Data were gathered through content analysis and the study was longitudinal. Data was analysed using descriptive statistics with STATA. Regression results showed that allocation of assets in Government stock was positive and significantly (tvalue 2.53, p=0.017) influence ROA in pension fund performance. Again Loan and Mortgage was found to negatively and significantly (t-value-2.55, p=0.016) influence ROA in pension funds. There is a negative statistically insignificant relationship between asset allocation in the real estate class and performance of pension funds (t-value -0.14, p=0.890). Recommendations to the regulators is that there is need for enforcing strict measures on pension funds that violate specified asset allocations and management needs to note that asset allocation in pension funds should not be random but it is important to monitor the contribution of each asset class to performance.